Innovation in Financial Services & Consumer Banking

Author
James Shelly

What to think when your venerable old financial institution starts urging you to use their mobile banking app at every turn? My bank (I can’t name them but they’re one of the country’s largest) hits me with messaging when I take out money from their ATM, when I log into their online banking platform, and the moment I step into their brick and mortar locations. It could be tempting to write this off as pure trend-chasing. Did the old fogeys in the corridors of financial power just suddenly become hip to the App Store?

Of course they didn’t. Mobile Apps for big banks are a big deal, and rapidly becoming the opening salvo in a battle for survival – or a signpost marking the beginning of the end. The irrepressible winds of creative destruction (credit: Alan Greenspan) have already blown the low-hanging fruit off the service industry tree and are now rattling the branches of high finance.

A new wave of banks – although some of them disavow that categorization – has the Chases and TD’s of the world scrambling to keep up. Businesses like Atom, Sofi, and Betterment, are transforming the banking user experience in ways that will feel familiar to anyone who’s made the transition from cab to Uber, or tradesman to TaskRabbit.

Here’s 4 key areas where these companies are innovating:

1. There are two key areas where these companies are innovating. First, they’re moving personal finance into a purely digital space. No shopfront? No problem!
It took until now for someone to recognize that ATMs are only the tip of the iceberg when it comes to automating the sector. These banks understand that visiting a physical location represents an unnecessary inconvenience for consumers.

2. A Race to the Cost Bottom
These banks aren’t able to just save on rent. By automating services they save processing costs too. One of the most popular capabilities in most new mobile banking apps is the ability to deposit checks by snapping a phone photo of them. Not only is this a convenience win, it also cuts a bank’s check-processing cost from $4.25 to $0.10, according to Javelin Research.

3. Phone as Financial Planner
The new wave of personal finance incorporates intelligent, reactive services into its App interface. The Atom App, for instance, boasts that it will be the world’s first “telepathic” bank – proactively offering up solutions to looming financial problems before the customer has even thought about them.

4. Finance…simplified
Not only do these Apps put a full range of banking service at your fingertips, the interface is clean, simple, and transparent. It’s a far cry from the veil of complexity that shrouded finance and investing in previous eras. In this respect, these Apps are emblematic of a renewed emphasis on UX that companies like Uber have pioneered on mobile platforms.

What does the future of banking look like?

1. Increased predictive/planning capability
Financial service tools will continue to refine the ability to predict and mitigate behavior in ways that benefit their users. Expect prompts as varied as “Are you sure you can afford this?” to “You know, this is an investment that makes a lot of sense for someone with your spending habits and risk tolerance” to be popping up as alerts on your phone in the near future.

2. Powerful analysis, packaged simply
Though the technology used for financial planning will grow increasingly robust, the experience of using it will continue to grow more simple, seamless, and deeply integrated. The credit card, for instance, may soon become a thing of the past, with mobile phones serving as the locus of all financial activity – as currency, as repository, and as investment house. It may seem outlandish to think that the wallet could be consigned to the scrapheap of history, but we think that’s a vision worth the change in your pocket.